Bloomberg Report: Boskalis Considers `Hundreds of Millions' for NZ Mine Investment

By Tracy Withers

     Feb. 15 (Bloomberg) -- Royal Boskalis Westminster NV, the world's biggest dredging company, is considering spending ``hundreds of millions'' on a ship capable of mining a phosphate bed twice the size of Tokyo off the coast of New Zealand.

     ``We're aiming to deliver a vessel that will do the operations,'' Gerard van Raalte, a senior engineer at the Netherlands-based company, said in an interview in Wellington. It may modify an existing ship or build one, he added.

     New Zealand's Chatham Rock Phosphate Ltd. in 2011 selected Boskalis as its partner to help tap a deep-sea bed holding about 25 million metric tons of rock phosphate, worth an estimated NZ$6 billion ($5 billion). Boskalis will likely proceed with its investment in the second half of this year, once it is confident of government approvals, Chris Castle, Chatham Rock's Managing Director, said in a telephone interview.

     Boskalis took a 20 percent stake in Chatham Rock last year as falling demand for dredging amid the global slowdown made off-shore mining more attractive. In return, Boskalis agreed to provide technology and research needed to mine the phosphate --a mineral used in fertilizers -- in an area about 450 kilometers (280 miles) off the South Island's east coast.

     ``The mining license is a given, I don't think anyone regards that as a risk,'' said Castle. For Boskalis ``it's more to do with the environmental consent and their confidence in the process. The button won't be pushed until they are sure.''

                         Final Decision

     The Papendrecht-based company has to choose a ship and develop technology in time for January 2015 -- the target production date -- to mine phosphate that's 400 meters under the ocean surface. That will require an investment of as much as ``several hundreds of millions of dollars'', said van Raalte. The company's final decision is pending consent, he said.

     The rock phosphate covers 4,726 square kilometers, according to Chatham Rock's website. That would provide a local alternative to the 1 million metric tons used in New Zealand each year that's primarily imported from Morocco, it said.

     Chatham Rock shares have surged 40 percent in the past six months and were at 35 New Zealand cents at 2:30 p.m. in Wellington. Boskalis has risen 22 percent in the same period.

     Boskalis's commitment would require the mining license and the environmental consent being granted ``or considerable certainty they are going to be issued,'' said Castle. ``We're confident of the outcome.''

     Chatham Rock applied for the mining permit last September and will seek environmental consent in April, said Castle. The permit to mine can take ``many months'' to process, Britton Broun, a spokesman for the Ministry of Business, Innovation and Employment, said in an e-mailed response to questions. There was ``no specified time period for consideration of'' Chatham Rock's application, he said.

                        Earning Millions

     Boskalis projects its mining rate will be about 70 euros ($93) a metric ton, said van Raalte. That would earn the company about NZ$165 million a year based on an estimated 1.5 million metric tons being mined in that period, Edison Investment Research analyst John Kidd said in a report last September.

     The company has been talking to New Zealand government officials and helping with the mining applications, which should help speed the process, said Castle. It has also modified its existing dredging technology to work at greater depths.

     Boskalis's New Zealand venture comes as the company broadens its business to curb reliance on dredging. It also has 92 percent acceptance for a $985 million offer for Dockwise Ltd. to add ships capable of pulling oil rigs. That followed a 2009 purchase of salvage company Smit Internationale NV, which last year removed fuel from the shipwrecked liner Costa Concordia.

     Mining ``is an interesting new market for the dredging industry,'' said van Raalte. ``Our competitors are also active in this field. Everybody's looking at it at the moment.''

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--Editors: Chris Bourke, Keith Gosman

To contact the reporter on this story:

Tracy Withers in Wellington at +64-4-498-2214 or

To contact the editor responsible for this story:

Chris Bourke at +64-4-498-2215 or